The initial public offering of CSB Bank Ltd sailed through on the first day of the offering, thanks mainly to robust demand from retail investors for shares of the private-sector lender.
The offering of 11.55 million shares, excluding the anchor allotment portion, had received bids for about 12 million shares at the end of the first day, stock-exchange data showed.
The quota reserved for retail investors was subscribed 5.6 times. The portion set aside for non-institutional investors was covered barely 9% while institutional investors largely stayed away.
The IPO closes on November 26. The bank has set a price band of Rs 193-195 for the share sale.
Earlier, the bank raised Rs 184.36 crore ($25.7 million) from a bunch of anchor investors including a Canadian pension fund and Indian alternative investment funds ahead of the IPO.
The lender, formerly known as Catholic Syrian Bank, sold 9.45 million shares at Rs 195 apiece to the anchor investors, according to a stock-exchange filing.
Canadian pension fund Ontario Municipal Employees Retirement System (OMERS) bought 3.58 million shares, or more than a third of the shares reserved for anchor investors, worth Rs 70 crore.
Ashoka India Opportunities Fund, a hedge fund managed by Singapore-based White Oak Pte Ltd, and IIFL Special Opportunities Fund each bought shares worth nearly Rs 11 crore. Edelweiss Group’s alternative investment fund, the Alpha Fund Scheme-1, bought shares worth Rs 5 crore.
Other marquee foreign institutions are HSBC India, Jupiter India and Aurigin Master Fund.
Indian asset managers, through their various schemes, participating in the anchor book were Axis Mutual Fund, SBI Mutual Fund, ICICI Prudential Mutual Fund, and Aditya Birla Mutual Fund.
Aditya Birla Sun Life Insurance Co was the sole Indian insurer participating in the anchor book.
Anchor investors, also known as cornerstone investors, are institutions that accept a one-month lock-in for a sizeable allocation of shares. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.
CSB Bank, controlled by Indian-born Canadian billionaire Prem Watsa’s investment firm Fairfax Financial Holdings Ltd, is seeking a valuation of Rs 3,600 crore ($502 million) through the IPO.
The Rs 625-crore public offer comprises a fresh sale of shares worth Rs 240 crore and a secondary sale of a little more than 19.77 million shares by 26 shareholders worth up to Rs 385 crore.
Existing individual and institutional investors selling stake in the IPO include HDFC Life Insurance Co. Ltd, ICICI Prudential Life Insurance Co. Ltd, Federal Bank Ltd, Bridge India Fund, Satellite Multicomm Pvt. Ltd and ICICI Lombard General Insurance Co. Ltd.
Fairfax, which acquired a 51% stake in CSB last year, is not selling any shares in the IPO. Fairfax’s 40% stake out of its total holding will remain locked-in for five years as per regulatory requirements.
Venture capital investor Volrado Venture Partners Fund II, which acquired CSB Bank shares in May 2017, is exempt from the lock-in period but is not selling any shares.
CSB Bank was originally incorporated in November 1920 and is one of the oldest private-sector banks in India. It has a strong base in Kerala, Tamil Nadu, Karnataka and Maharashtra.
The bank will use net proceeds to augment its tier-1 capital base for its future capital requirement, which it expects to arise from growth in assets, primarily the lending operations.
The proceeds from the fresh sale of shares will also help the bank to ensure compliance with the Basel-3 norms and other regulatory guidelines.
Axis Bank and IIFL Holdings are merchant bankers managing the bank’s share sale.